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A PEST analysis of external factors that affect the airline industry

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Eva Mulder

on 19 May 2015

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Transcript of A PEST analysis of external factors that affect the airline industry

Statement of purpose: to examine the effect of external business factors on commercial airlines using a PEST analysis.
Group 2: Nynke Buwalda, Eva Mulder, Manon Mulder, Bert Sloof

Political Factors
Economic Factors
Social Factors
A PEST Analysis of the External Environment
The Airline Industry
Increased Popularity of Holidays abroad
Causes of increase international tourism
- greater awareness of foreign destinations through the media
- increasing disposable income
- decreasing relative prices of air travel

→larger customer market
→more diverse customer market

International Tourist Numbers
Business passengers:
growing customer segment
increase revenues at higher rate
Change in the nature of work and passenger
Ageing Population
population is ageing
→average traveller ageing
→average airline requirements changing
- help booking a flight
- help checking in
- more assistance due to poor health

Median age of the population
Growing Concern for the Environment
Intergovernmental Panel on Climate Change (IPCC)
Air travel is responsible for 3.5% of climate change and this number could grow to 15%

Growing concern for the environment
→ fall in demand for air travel
→ increase in demand for eco-friendly airlines
Technological Factors
Information Technology Developments
The internet made it possible to:
Take bookings
Distribute electronic tickets
Reach a larger group of consumers
Information Technology Developments
Sales via the internet
Ticketless travel
Ryanair introduces mobile app and Twitter account

Developments in Fuel Efficiency
Fuel bill 2015: $192 billion
26.1% of operating expenses
Porter bought Bombardier Q400
Industry Wide Progress
Aer Lingus
Product innovation and service excellence:
Terrorists attacks
Heightened security measures
Decreased customer numbers
Increasing Security Measures
Government Investments
Infrastructure investments
Increased accessibility
Prefer over alternatives
Increased business
Freedom of Movement and Trade
Freedom of movement EU
Third Air Liberalization Package
Increased competition
Business growth

Low-cost Airlines
First: Ryanair and EasyJet
Increasing demand
The market adapts to lower fares
Economic Downturn
Financial crisis 2009
Decrease in demand
Difficult to access financial aid
Increasing productivity
Reducing costs most effective
UK-Europe passenger traffic, year-on-year growth 1991-2013
The Fluctuation of Interest Rates
Financial Risk Management
Difficulty to repay debts
saving or spending
Changing external business environment
PEST analysis
Remain competitive
Statement of purpose


Succes & Failure

Jet Fuel
Jet fuel or aviation turbine fuel (ATF) is a type of aviation fuel designed for use in aircraft powered by gas-turbine engines. It is colourless to straw-coloured in appearance. The most commonly used fuels for commercial aviation are Jet A and Jet A-1, which are produced to a standardized international specification. The only other jet fuel commonly used in civilian turbine-engine powered aviation is Jet B, which is used for its enhanced cold-weather performance.

Porter Bombardier Q400
Provides better ride quality compared to other aircrafts
Leather seats
Extra leg room
Vibration-cancelling technology

Has superior fuel efficiency compared to jets of comparable size.

Interest Rates
Complicated: multiple effects that can even cancel each other out, especially on consumption
The effect on savings and investments is clear
Full transcript